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Unlicensed Advisor Sentenced to 6 Years in Prison for $4M Ponzi Scheme

Charles Richard Burgess will go to prison for more than six years for fleecing investors of more than $4 million, while pretending to be a registered investment advisor.

A Washington-based man who defrauded more than $4 million from investors while claiming to be an advisor was sentenced to more than six years in prison after being convicted of mail fraud charges, according to the Department of Justice.

While Charles Richard Burgess of Vancouver, Wash., purported to be an investment advisor, he was never licensed or registered, according to the DOJ. A federal court judge handed down the sentence last Friday in Tacoma, Wash.

“It is heartbreaking to read the victim statements describing how their lives have been dramatically altered—no retirement, no funds to care for disabled children, in one instance a victim’s home placed at risk of foreclosure,” U.S. Attorney Nick Brown said about the case.

Starting in early 1995, Burgess began soliciting investors, including friends and family, to invest in an unregistered vehicle he referred to as “the pool,” according to the DOJ. He did so while not checking clients’ risk tolerance nor giving them information on the purported types of investments he made with their money.

Instead, Burgess offered false statements showing clients’ account balances grew over time. (In 2016, for example, he sent out statements showing 10% growth for investors’ funds, despite the fact that the investments lost money that year.) Burgess also misled investors by saying he’d collect fees only if the funds made money, and that he’d “personally absorb” losses, according to the DOJ.

By 2013, Burgess was already unable to pay back investors’ principal or the nonexistent profits. That year, while he told investors that his accounts totaled $4.2 million, in reality, they were only around $711,000. (By 2020, that widened to claims of $10.3 million, when there was only $113,000 in total assets in reality.) 

But Burgess would pay the principal for existing investors with funds from new investors, according to the DOJ. By the end of the scheme, he’d convinced 64 people to invest about $13.4 million, and 32 investors lost $4.3 million in principal payments. In victims’ statements, they called him a “pathological liar” and a “con,” while Chief U.S. District Judge David Estudillo noted the “long-lasting effects of the scheme.”

“To lie, to cheat, to steal seem to be the values you were living by,” he told Burgess during sentencing.

In addition to his prison sentence, Burgess was ordered to pay more than $4.3 million to harmed investors.

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